fix(kit): correct config loading and isolate ACP sessions

- Isolate each ACP session's config store instead of sharing the global
  viper, preventing per-session SetModel/SetThinkingLevel races; seed the
  root-command flag values (model, thinking-level, provider URL/key) so
  `kit acp -m <model>` is still honored
- Run initConfig for isolated SDK stores by gating on opts.CLI instead of
  v.GetString("model"), which setSDKDefaults always populates and thus
  skipped .kit.yml / KIT_* loading for SDK callers
- Configure KIT_* env overrides unconditionally in initConfig so passing an
  explicit config file no longer disables environment variable support
- Wrap config unmarshal/validate errors with %w to preserve the error chain

internal/acpserver/session.go

@@ -7,6 +7,7 @@ import (
 	"sync"
 
 	"github.com/charmbracelet/log"
+	"github.com/spf13/viper"
 
 	"github.com/mark3labs/kit/internal/extbridge"
 	"github.com/mark3labs/kit/internal/extensions"
@@ -38,14 +39,20 @@ func newSessionRegistry() *sessionRegistry {
 // given working directory. The Kit-generated session ID is used as the ACP
 // session ID so the mapping is 1:1.
 func (r *sessionRegistry) create(ctx context.Context, cwd string) (*acpSession, error) {
+	// Each ACP session gets its own isolated config store (CLI is left nil) so
+	// per-session SetModel / SetThinkingLevel calls cannot race or bleed across
+	// the sessionRegistry. We seed the relevant root-command flag values from
+	// the process-global store (which cobra populated from flags) so launching
+	// `kit acp -m <model> [--thinking-level ...] [--provider-url ...]` is still
+	// honored; .kit.yml and KIT_* env vars are loaded per session by kit.New.
 	kitInstance, err := kit.New(ctx, &kit.Options{
-		SessionDir: cwd,
-		Quiet:      true,
-		Streaming:  true,
-		// Share the process-global config store so cobra flag bindings and
-		// config loaded by the CLI's cobra.OnInitialize remain in effect for
-		// the ACP server. SDK consumers leave CLI nil to get isolated stores.
-		CLI: &kit.CLIOptions{},
+		SessionDir:     cwd,
+		Quiet:          true,
+		Streaming:      true,
+		Model:          viper.GetString("model"),
+		ThinkingLevel:  viper.GetString("thinking-level"),
+		ProviderURL:    viper.GetString("provider-url"),
+		ProviderAPIKey: viper.GetString("provider-api-key"),
 	})
 	if err != nil {
 		// Provide actionable guidance for provider auth errors, which are

internal/config/merger.go

@@ -31,7 +31,7 @@ func LoadAndValidateConfigFrom(v *viper.Viper) (*Config, error) {
 		MCPServers: make(map[string]MCPServerConfig),
 	}
 	if err := v.Unmarshal(config); err != nil {
-		return nil, fmt.Errorf("failed to unmarshal config: %v", err)
+		return nil, fmt.Errorf("failed to unmarshal config: %w", err)
 	}
 
 	// Fix environment variable case sensitivity issue
@@ -39,7 +39,7 @@ func LoadAndValidateConfigFrom(v *viper.Viper) (*Config, error) {
 	fixEnvironmentCase(v, config)
 
 	if err := config.Validate(); err != nil {
-		return nil, fmt.Errorf("invalid config: %v", err)
+		return nil, fmt.Errorf("invalid config: %w", err)
 	}
 
 	return config, nil

pkg/kit/config.go

@@ -92,6 +92,17 @@ func initConfig(v *viper.Viper, configFile string, debug bool) error {
 	if v == nil {
 		v = viper.GetViper()
 	}
+
+	// Configure KIT_* environment overrides unconditionally, before any file
+	// is loaded, so that an explicit config file does not disable env support.
+	// Map hyphenated config keys (e.g. "max-tokens") to underscored env var
+	// names (e.g. KIT_MAX_TOKENS); without this AutomaticEnv looks for
+	// KIT_MAX-TOKENS and silently misses valid overrides. Precedence is
+	// resolved at read time, so calling these before ReadConfig is fine.
+	v.SetEnvPrefix("KIT")
+	v.SetEnvKeyReplacer(strings.NewReplacer("-", "_"))
+	v.AutomaticEnv()
+
 	if configFile != "" {
 		return loadConfigWithEnvSubstitution(v, configFile)
 	}
@@ -130,12 +141,6 @@ func initConfig(v *viper.Viper, configFile string, debug bool) error {
 		fmt.Fprintf(os.Stderr, "No config file found in current directory or home directory\n")
 	}
 
-	v.SetEnvPrefix("KIT")
-	// Map hyphenated config keys (e.g. "max-tokens") to underscored env
-	// var names (e.g. KIT_MAX_TOKENS). Without this, AutomaticEnv looks
-	// for KIT_MAX-TOKENS and silently misses valid env overrides.
-	v.SetEnvKeyReplacer(strings.NewReplacer("-", "_"))
-	v.AutomaticEnv()
 	return nil
 }
 

pkg/kit/kit.go

@@ -1223,10 +1223,13 @@ func New(ctx context.Context, opts *Options) (*Kit, error) {
 		setSDKDefaults(v)
 
 		// Initialize config (loads config files and env vars) into the instance
-		// store. Only initialize if not already done (e.g., by CLI's
-		// cobra.OnInitialize, which populates the shared global store).
+		// store. The CLI shares the process-global store, which cobra.OnInitialize
+		// has already populated, so re-running initConfig there is unnecessary;
+		// SDK callers get a fresh isolated store that must be loaded here.
+		// We key off opts.CLI (not a config value) because setSDKDefaults always
+		// seeds "model", which would otherwise mask an empty store.
 		// SkipConfig bypasses .kit.yml file loading (viper defaults and env vars still apply).
-		if !opts.SkipConfig && v.GetString("model") == "" {
+		if !opts.SkipConfig && opts.CLI == nil {
 			if err := initConfig(v, opts.ConfigFile, false); err != nil {
 				return fmt.Errorf("failed to initialize config: %w", err)
 			}